Why build passive income?

Passive income is a popular term nowadays and most of you have undoubtedly heared about it. But why, you may ask yourself is it so popular? The popularity of passive income is fairly easy to explain; if you build a passive income portfolio you will achieve financial freedom which is something most people desire. Having financial freedom allows you to have more control over your life. You no longer depend on a paycheck from your employer and have the option to work if you want to and not because you have to. Having the money to to cover your costs of living brings with it a tremendous piece of mind. And knowing that you will still get paid even though you don’t actively work for it is real nice also.

How to go about building your passive income portfolio?

The obvious  problem, is how to build passive income and there are a lot of different ways in which you can achieve your passive income goals. It is not a one size fits all solution and all the various ways of earning a passive income are not right for everyone. You should explore various way of earning passive income and use the methods that are right for you and which you fully understand.

Personally I prefer a diversified passive income portfolio which includes earning money through my websites, dividend stocks/funds, real estate and several businesses run by a manager. Passive income opportunities vary and you need to be fully comfortable with the options that you choose to work for you.

Many people prefer to earn their passive income through web sites employing various revenue models. These could be sites which earn money from advertisements, websites which sell physical products that are drop shipped, websites promoting affiliate programs, subscription based websites, etc… What ever revenue model you choose employ there is definitely money to be made if you play your cards right. Just beware of the countless claims that litter the Internet that once your website is established, you can just leave it alone and it will keep earn you money on a  regular basis. This is simply not true. Like any business, if neglected it will dwindle away into nothing.  It is not as simple as setting up a bunch of websites and watching the money roll in. Not even close. There are things that must constantly be done, and much depends on your websites revenue model.  Two of the tasks that must be done on a regular basis when you own a website are marketing and the addition of new content, both of which can be outsourced when you find the right person for the job. Making money from a website or multiple websites does not become truly passive until after the website is established and you have outsourced the day to day operations in running the site. After the site is at this point you can move into setting up the next site to build your website portfolio. Keep in mind that having a portfolio of websites that are constantly earning money is not as simple as many make it out to be. There is a lot of hard work involved and there are no shortcuts. Nevertheless this is an excellent addition to any passive income portfolio and can earn you a substantial amount of income.

Building a portfolio of dividend paying stocks and other securities is also a very important part of building your passive income streams, but you should be comfortable with investing in stocks, mutual funds, reits, etc… and the risks associated with those types of investments.  You should also have a good understanding of how things work before you invest a dime.  I prefer stocks that pay monthly dividends as opposed to ones that pay their dividends quarterly.  Most people do not realize that there is a big difference between monthly and quarterly dividends with monthly dividends being much better then quarterly dividends particularly over a long period of time.

Another great addition to any passive income portfolio is rental real estate. Owning one or more rental property can be a great boost to your passive income not to mention the fact that it will also build your equity at the same time. This is obviously not for everyone, but if investment real estate is right for you, you can take advantage of the many benefits of utilizing rental real estate for your passive income portfolio.

There are other types of passive income including royalties from products you created such as by writing books or songs, creating computer software or by selling photography. Your copyrighted products will earn money through royalties from every sale made. This is obviously not for everyone as you have to be able to write in order to accomplish this.

Conclusion

Whatever tools you choose to help you build your passive income portfolio, the main thing to remember is that building the passive income streams will not be easy. It will most likely take a substantial amount of time and effort before you can achieve financial freedom through it. But given enough time, provided that you do the right things, success is indeed achievable. It is important that you do not expect quick results. Be persistent along the way and you will eventually be successful.

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